Tensions in Mozambique may threaten extractive sector

The political situation in Mozambique has become worrisome, as opposition party Renamo puts pressure on the ruling Frelimo party and threatens to use force to achieve its political objectives. Conflict over recently discovered energy reserves could threaten investment in the country’s developing coal and gas sectors.

On the 4th of April, the leader of the largest Mozambican opposition group, Renamo’s Afonso Dhlakama, confirmed a confrontation between the army and Renamo soldiers at Mhabondze in Mozambique’s Gaza province.

According to his statement, 150 Renamo troops were moving south towards the country’s capital, Maputo. Accusing the government of opening fire and causing a confrontation, he suggested that government troops should keep 10 to 20 km away from Renamo soldiers. This type of situation, where the main opposition party controls its own army, is highly unusual and casts a shadow over the country’s economic and political stability.

Post-electoral tensions

The highly volatile political environment is the result of built up tensions following presidential, legislative and provincial elections held last October. The opposition made some progress but the incumbent party, Frelimo, which has ruled the country since its independence in 1992, managed to consolidate its power.

The presidential candidate for Frelimo, Filipe Nyusi, obtained 57% of the vote, against 37% for Afonso Dhlakama from the Renamo party, and 6% for Daviz Simango of the MDM party. Results for the legislative elections were in the same range.

The uneven playing field in the electoral campaign, with Frelimo profiting from control of state resources and media access, has been noticed by the international community. When the constitutional council released the final, official results at the end of December 2014, the opposition rejected the electoral results, thereby reopening a political crisis.

The political and security situation has been escalating rapidly over the last few months. In January, Dhlakama threatened to set up a secessionist “Republic of Central and Northern Mozambique,” and recently passed a bill to set up “provincial municipalities” in the country’s parliament, the Assembly of the Republic.

The opposition aims to establish autonomous regions in the provinces of Sofala, Zambezia, Manica, Tete and Nampula, where Dhlakama won the largest share of the presidential vote in October. However, in the sixth province Dhlakama claims, Niassa, the ruling Frelimo party won both the presidential and the parliamentary election.

The complex process of negotiations and threats between Renamo and the government could continue for some time, with issues of power and wealth-sharing at stake. Dhlakama is convinced that only relentless pressure can make the government accept further concessions.

Renamo has tried to use the electoral results to its advantage, leveraging voting irregularities to get a piece of the economic pie. Some of the provinces it claims to have won host large economic resources and activities.

The Tete province is estimated to hold large untapped coal reserves of 25 billion short tons, complemented with smaller reserves in Niassa. The Sofala region hosts the port of Beira, where Mozambique exports goods from neighbouring landlocked countries.

Although the province is surrounded by Renamo strongholds, the gas-rich Cabo Delgado province, where 190 of a total 200 trillion cubic feet of gas are located in deep water off the coast, largely voted for the Frelimo party. According to the Cabo Delgado Provincial Elections Commission, Frelimo won 76.58 per cent of the vote in the province in the general elections, with Renamo winning 15.74 per cent.

Despite this enormous difference, Dhlakama already made statements about including Cabo Delgado in his proposal for autonomous regions. The province remains of large strategic importance and could be the subject of a political arena in the future.

Consequences for the business climate

The recent escalation of political tensions and the muscle rolling of Dhlakama could cast a shadow over the country’s economic and political stability.

Businesses operating in Mozambique should be concerned because the sources of wealth creation in the country are the direct bone of contention between the opposition and the incumbent. Dhlakama’s vivid speeches, inciting large parts of the population. fosters the polarization between the two power blocks.

The power struggle most certainly tempers predictability for the country’s investor’s climate. Foreign direct investment, so far, has been expanding considerably in Mozambique. With the discovery of vast gas deposits off-shore, along with prospects for extensive coal mining, more FDI is needed to boost the economy and build up the capabilities of the extractive sector.

With the drop in energy prices, the trend of a large amount of FDI coming into the country could slow down and major contracts could be rescheduled. Since the economy is largely dominated by large-scale projects funded by foreign capital, improving the business climate and investing in infrastructure facilities will therefore be key to keep attracting FDI.

Taking the economy hostage by making actual threats is the biggest political tool Dhlakama could use at this point to keep the pressure on Frelimo’s president Nyusi. In this regard, implementation of the Memorandum of Understanding, signed in September 2014 by the government and Renamo and aimed at facilitating greater inclusiveness in the security and the political systems, is key to accommodating both parties and avoiding further escalation.

It remains to be seen how the situation will evolve in the future, but an escalation of tensions should not be excluded as a possible scenario.

About Author

Nick De Vlaminck has worked for the Belgian Embassy to Senegal, Cape Verde, Guinea-Bissau, Guinea and the Gambia, as well as for the European External Action Service where he worked in the Horn of Africa, East and Southern Africa, Indian Ocean Directorate. He holds a Master’s Degree in European Union Studies from Ghent University and an Advanced Master’s degree in Diplomacy & International Relations from the University of Antwerp, and has spent semesters abroad at the Marmara University in Turkey and the University of Coimbra in Portugal. Nick is proficient in Dutch, English, French and Portuguese.